A multi-million pound scandal has erupted over two blocks of council homes which are still lying empty more than a year after they should have been finished – in the midst of a borough-wide housing crisis.

The buildings, in Mulkern Road and Holland Walk, Archway, were meant to be ready for those in need in March last year but a series of blunders, which one local councillor has branded a “disgrace” means they still aren’t ready to live in.

Work on the project, thought to be worth about £2million, was started in 2010 by an Islington Council contractor called Rok, which went bust in November of that year.

A second contractor, Primus, picked up the baton in April 2011 but still hasn’t finished the job and has been sacked by the council, which is now looking for a third company to finish the troubled project.

Cllr Lorraine Constantinou, who represents Hillrise ward which covers the two buildings, said: “It’s an absolute disgrace that these new properties have been left sitting there for years without anything being done. The sad thing is, people are desperately short of housing in Islington, particularly now the bedroom tax has come in.

“And because Islington Council keeps hiring turkeys for contractors, they are left empty. It’s depriving people in need and it’s a desperate shame.”

There are 13 properties in the two blocks. Cllr Constantinou said: “These are big family houses, five bedroom courtyard properties, which are really hard to come by.

“People are crying out for homes this size and are probably sitting in bed and breakfasts at public expense waiting to move in. It’s shocking.”

Islington Council estimates it costs £220 per week to keep each single person in temporary accommodation in the private sector, so the potential cost of housing people who were due to move into the two new blocks could run to £500,000.

Carl Quilliam, who lives nearby, said: “It’s a scandal that these properties are laying empty for months and sometimes years when more housing is desperately needed.”

Cllr James Murray, executive member for housing and development, said: “In this case we have been very disappointed by the existing contractor who has failed to complete the works on time.

“We are working to get another contractor to finish the work so they can be made ready for residents to move into.

“We’ve not incurred any extra costs up to now, but if there are any in appointing a new contractor, we will seek to recover them.”